Kansas House lawmakers work into the night on tax plan

TOPEKA — The Kansas House gathered after midnight Friday with the hope of passing a tax plan to avert massive budget cuts, which Gov. Sam Brownback warned would occur Monday if lawmakers failed to act.

Brownback pleaded with Republican lawmakers to pass a tax plan to keep the state financially solvent Thursday afternoon, tearing up and warning that the nation is watching Kansas.

House members developed a plan Thursday evening that would fill the state’s budget hole and leave about $36 million at the end of fiscal year 2016, which begins in July.

The plan – which would require the passage of two bills – would raise the sales tax from 6.15 percent to 6.5 percent on July 1, which would bring in about $164 million in revenue.

The House would also move forward with the governor’s proposal to eliminate income taxes for 380,000 low-income Kansans starting January 1, 2016. Some analysts have warned that low-income Kansans will still end up paying more taxes overall because of the sales tax hike.

The House plan lacks a reduction to the sales tax rate on food that had been included in a plan previously passed by the Senate. Republican lawmakers promised to revisit the issue during next year’s legislative session.

Brownback and top administration officials warned that massive budget cuts would have to be enacted Monday if lawmakers fail to pass a tax plan that fills the state’s budget hole. House and Senate Republicans held a rare joint caucus meeting Thursday afternoon, hours after the House had rejected the Senate’s tax plan.

“We’re at day 112. … We’re at Thursday. By Monday you have to come up with something,” Brownback said.

Jim Clark, the secretary of administration, told the meeting that his department needs to begin entering budget information into the state’s accounting system Monday in order to ensure that payments to agencies go out on time when the fiscal year starts July 1.

State law forbids an unbalanced budget. That leaves a limited set of options.

Budget director Shawn Sullivan said the governor could veto the entirety of the state’s $15 billion budget or he could use line item vetoes to fill the state’s nearly $400 million shortfall.

For example, Sullivan said, issuing line item vetoes of combined state budgets for Wichita State University and the state’s other regents institutions would fill the shortfall, or the administration could proceed with a 6.2 percent across-the-board budget cut that would cost Kansas public schools nearly $200 million.

The Kansas Board of Regents released a statement Thursday evening decrying the floated cut.

“The governor’s announcement this afternoon of a possible veto of all public higher education funding puts the state of Kansas in an unprecedented situation,” said Andy Tompkins, president and CEO of the Board of Regents. “To completely defund higher education will have a devastating and long-lasting effect on students, families, businesses, and the entire economy of the State of Kansas.”

Sullivan said all of these were horrible choices. He said that eliminating higher education funding was “not a permanent solution obviously.”

Clark and Sullivan both warned lawmakers that the longer the tax and budget fight continued, the more likely the state would suffer a downgrade to its credit rating.

Brownback called on lawmakers to pass a tax plan instead to avert the budget slashing.

He told lawmakers they could move forward with the plan already passed by the Senate or the one he unveiled two weeks ago. Either way, he said, they needed to move quickly.

“Now is the time you’ve got to act,” he said. “You’ve just got to act.” Brownback began to tear up, noting that he called lawmakers from the hospital when his first granddaughter was born this past weekend to urge them to support the Senate plan.

House negotiators developed a plan Thursday evening that represented a combination of the Senate and governor’s plans.

Senate President Susan Wagle, R-Wichita, who had suggested the joint meeting, also stressed the urgency of the situation.

“It’s a crisis. We have not served Kansans well. And the time is short,” she said.

Wagle called on Republicans as the governing party with supermajorities in both houses of the Legislature to act quickly and end the standoff Thursday evening.

“This is not Washington, D.C.,” Wagle said. “We cannot pass an unfunded budget. That is not who we are.”

Some lawmakers noted that the plan bore a striking similarity to a plan that the House had overwhelmingly rejected earlier on Thursday by a vote of 95-20.

Rep. Don Hill, R-Emporia, a moderate remarked that the plan had appeared to grow worse throughout the day and said he planned to oppose it.

Rep. Gene Suellentrop, R-Wichita, the vice chairman of the House Tax Committee, said that he expected the second vote to be more successful than the first because the reality of the situation had set in for many lawmakers.

Rep. Pete DeGraaf, R-Mulvane, a hard-line conservative, said he had no intention of voting in favor of any tax hike Thursday afternoon.

“The Legislature still has the option of producing a better budget. … The reality is we haven’t cut enough,” DeGraaf said.

House leaders developed a budget that relies on the governor making $50 million in unspecified cuts after the Legislature adjourns, a promise that was likely meant to entice conservatives to vote for the tax plan. If the governor proceeds with the cuts, the state would have a projected ending balance of $86 million for 2016.

Brownback told lawmakers that there was no use pointing fingers at each other and that everyone shared in the blame for the situation, including him. However, Brownback would not say what he was to blame for specifically.

Democrats, on the other hand, are quick to assign the entirety of the blame to Brownback and and the tax cuts he ushered into law in 2012.

Senate Minority Leader Anthony Hensley, D-Topeka, called Brownback’s warnings of budget cuts a “threat fest.”

“It’s amazing that a governor who claims he’ll stand down and let the Legislature do their job is now dictating to the Legislature and saying you only have two options: it’s either my plan or the Senate plan,” Hensley said. “Here’s a guy who has steadfastly refused to admit that because of his income tax cuts that’s why we’re in the shape we’re in.”

The House plan would keep several controversial elements of the Senate’s plan, including a requirement that a person have a social security number for at least one year before requiring for a tax credit and a provision that would restrict local governments from raising property taxes.

However, the House discarded the Senate’s plan to eliminate most sales tax exemptions in four years.

Sen. Les Donovan, R-Wichita, the Senate’s beleaguered tax chairman, said he was not optimistic the House would pass a plan in time to prevent budget cuts.

“When you think you have something so many times and then you’re disappointed, after a while, you get burned out,” Donovan said.

This story was originally published June 11, 2015 at 5:45 PM with the headline "Kansas House lawmakers work into the night on tax plan."